Mortgage Advisor Complaint

lululemon8

Hi -  long story short, I got my offer to re-mortgage through certain major mortgage advisor in Nov 2022, applications were made in Aug 2022. It's a variable rate product based on the product firm's own rate. I was advised by the advisor that:

1) the product is not index-linked;
2) in the last two years even when BOE increased the interest rate, the product's rate was not increased;
3) the variable rate would not change more than once in a 12 month period.

However in reality, the variable rate increased from 2.09% in Aug 2022 to 2.49% in Nov 2022 (the advisor suggested this could be their once a year adjustment) to 4% on my actual drawdown date in Jan 2023.

I feel like I have been misled by the advisor and he has downplayed the risk of the product by saying in past years, the variable rate of the product did not change despite BOE interest rate changes and that the interest rate would not change more than once in a 12 month period.

Can I make a complaint about this? And how and to whom? If rates keep changing like this, I will not be able to keep up with repayments.

Many thanks.

MalMonroe

Hi, you can try complaining directly to the mortgage broker. If you get no joy then you can complain to the Financial Ombudsman Service.

https://www.financial-ombudsman.org.uk/consumers/how-to-complain

MWT

lululemon8 said:

1) the product is not index-linked;
2) in the last two years even when BOE increased the interest rate, the product's rate was not increased;
3) the variable rate would not change more than once in a 12 month period.

However in reality, the variable rate increased from 2.09% in Aug 2022 to 2.49% in Nov 2022 (the advisor suggested this could be their once a year adjustment) to 4% on my actual drawdown date in Jan 2023.

I feel like I have been misled by the advisor and he has downplayed the risk of the product by saying in past years, the variable rate of the product did not change despite BOE interest rate changes and that the interest rate would not change more than once in a 12 month period.

It would be helpful to name the lender and the product so the terms can be seen...

ACG

The terminology you are using is not correct so I am making a couple of assumptions on what I think you mean. 

Most mortgage products are not linked to the bank of england base rate. They are typically linked to the actual banks base rate. Which in fairness usually follows the bank of england base rate but not always. A few building societies have not passed on all of the rate rises for example. 

In that respect, it could be that what you have been told is correct - although maybe a more thorough explanation was needed. We have been explaining the banks base rate a lot more over the last 6 months than ever before. 

In terms of the annual rate change, speak to the broker. See what they say. It could just be a misunderstanding. 

dunstonh

1) the product is not index-linked;
2) in the last two years even when BOE increased the interest rate, the product's rate was not increased;
3) the variable rate would not change more than once in a 12 month period.

1 - What is meant be index linked? - that is not a term that refers to mortgages
2 - that would indicate it would have to be a fixed rate or a cap & collar mortgage (latter is unlikely)
3 - the whole point of variable rates is that they are variable.  I wonder if you mean they only assess the mortgage payment once a year? -  Some mortgages offer that functionality but it still costs you.   However, you don't appear to have that enabled as you have had two changes.

There appears to be some confusion in what you have told us.     Perhaps this confusion is the cause of other issues?

People generally forget around two thirds of what they are told within a few weeks of a meeting about things they are unsure about.  Words like could get mixed up with should in your head.    Terminology gets mixed up and context can be lost.   This is why a written report is issued that explains the mortgage and the terms agreed and why.     So, what does that report say about the mortgage and why you chose it and why it is suitable?

Can I make a complaint about this? And how and to whom? If rates keep changing like this, I will not be able to keep up with repayments.

Mortgage rates are still way below the long term average, which is around 7%.  If you are already getting close to your upper limit then you seriously need to think about your budgeting and perhaps consider selling up and getting a more affordable property or start overpaying the mortgage to get your debt down, which in turn will give you some breathing space when mortgage rates go back up.

lululemon8

testing testing

lululemon8

sorry, don't know why my previous reply got lost..

Its the standard variable rate capital repayment mortgage with Accord.

Whilst this and most mortgage products are not linked to the BoE rate, the adviser's statement 'the product's standard variable rate has not increased in the past two years despite increases in the BoE rate' gave me the false sense that Accord does not pass any of the rate rises on at all. I feel this is an understatement of the risk. Had he not said that, I would probably have been much more cautious about this variable rate product.

I re-read the offer letter, yes it is the mortgage monthly payment that gets reviewed once a year, but when he explained to me the increase from Aug 2022 (application date) to Nov 2022 (offer letter date), it is that once a year review, so I won't be seeing any more changes until Nov 23. So I am a bit confused.

My frustration is that I feel the adviser has not clearly articulated the risks associated with the product and the terms to a non English as first language layman, do I have a case?

ACG

Building societies were not passing on all of the rate rises, there were reasons for that but I wont bore you with them. I know I was having conversations last last year explaining lenders had not passed on the earlier rate rises and not all of the latter ones. I do normally cover that off with something along the lines of "there is no guarantee that will happen down the line." 

Your terminology is off, the broker would not have used terms that you have used. There is nothing wrong with that, but are you sure the broker is at fault or is it just one of those things where the broker thought you understood but did not? I cant answer that question, nobody hear can. 

If the broker was at fault fair enough, but if there was a misunderstanding sometimes we have to take responsibility. As I said in my earlier post, speak to the broker. You would be amazed at how much stuff we have to have on file. A copy of the mortgage offer (which would have explained rates are variable presumably), potentially also a suitability letter confirming the same thing. If you have had both of these, its quite difficult for you to blame the broker as you are in essence saying they said one thing but the documents you were given say something else. It would make no sense for the broker to lie as they do not get more money if you go on a variable rate or a fixed rate for example. 

MWT

lululemon8 said:

... but when he explained to me the increase from Aug 2022 (application date) to Nov 2022 (offer letter date), it is that once a year review, so I won't be seeing any more changes until Nov 23. So I am a bit confused.

This part in particular would be very odd if that is exactly what the broker said... was any of that in an email or written form, or was it just a phone call..?

It is hard to imagine even the most inexperienced broker saying that about a variable rate mortgage...